Recently, a proposal put forth by prominent Ethereum developers, including Vitalik Buterin, Sam Wilson, Ansgar Dietrichs, and Matt Garnett, aims to revolutionize Externally Owned Accounts (EOAs) by suggesting a new transaction type. This proposal, currently in its drafting phase, suggests the introduction of a transaction type designed to temporarily convert EOAs into smart contract wallets during transaction execution, providing functionalities similar to those detailed in EIP-3074.

Outlined in the draft proposal known as EIP-7702, the novel transaction type is set to streamline transaction batching and introduce sponsored transactions that can be paid for by another account. It would involve a contract_code field and a signature, empowering EOAs to adopt smart contract capabilities on a temporary basis, with the core objective being to enhance the usability and security of EOAs, addressing issues like transaction batching, sponsored transactions, and privilege de-escalation.

Moreover, this proposed standard would enable privilege de-escalation by allowing users to sign subkeys with restricted permissions. For example, a wallet administrator could authorize subkey holders to spend only ERC-20 tokens, access a limited portion of a wallet balance, or utilize specific applications. Positioned as an alternative to EIP-3074, this draft proposal aims to resolve concerns related to forward-compatibility. Unlike EIP-3074, it steers clear of introducing opcodes that might become outdated in an envisaged "endgame account abstraction" scenario, where all users employ smart contract wallets.

Anticipating the potential necessity of endgame account abstraction when quantum computing disrupts the cryptography used in conventional Externally Owned Accounts, Buterin and fellow proposers foresee a scenario where EIP-3074 could lead to the emergence of a separate invoker contract ecosystem, diverging from the smart contract wallet ecosystem. Through the introduction of EIP-7702, the proponents aim to avert such fragmentation of efforts and maintain a cohesive approach within the Ethereum ecosystem.

Although the proposed EIP-7702 presents potential benefits, Buterin acknowledges that similar to its counterpart, it may face criticism due to its reliance on code trust and the possible implications for centralization. The introduction of privilege de-escalation raises challenges that are not easily dismissed. Currently in the drafting phase, the fate of EIP-7702 remains uncertain, but developers are gearing up to implement EIP-3074 in Ethereum's upcoming upgrade, Pectra, slated for late 2024 or early 2025.

In a related development, Ethereum welcomed ERC-4337 in March 2023, offering account abstraction features that align with the propositions put forth in EIP-7702. These features encompass group-access wallets, bundled transactions, and sponsored transactions, collectively providing services with the capability to manage user wallets without directly holding custody of user funds. These standards offer a practical alternative to fully centralized service models, empowering users and augmenting decentralization within the Ethereum ecosystem.